Top 10 Bankruptcy Do’s & Don’ts: 6. Don’t Use Credit Cards Once You Decide to File

January 17, 2014

In today’s modern economic climate, the average person has incredible access to short term credit, i.e. credit cards. Credit cards can be a great financial tool, however, they need to be used wisely. If left unpaid, the high interest rates can have a financially crippling effect. This in turn leaves many people in an unmanageable credit debt situation. This is one of the leading causes of financial instability and often time creates a situation that is unsolvable without court-ordered relief.

Once you decide to pursue bankruptcy as a solution to your financial situation it is imperative that you begin behaving as if you are in a bankruptcy. Don’t make any major purchases, don’t transfer property, and stop using your credit cards.

Without sufficient income to cover your monthly expenses, this can be incredibly difficult. A person becomes dependent on their credit cards and they don’t know how they are going to make monthly purchases without them. Nonetheless, purchases made on a credit card immediately preceding filing your petition could end up surviving the action. In other words, you may still be on the hook for those purchases once your bankruptcy is over.

It’s not worth the threat to your fresh start. You don’t want to go through the process and still be paying on unsecured credit card debt. Furthermore, once you sit down and discuss your case with your attorney you may be surprised at how much your financial situation can actually improve. Bankruptcy could lower your interest rates on your current auto loans, allow you the option to pay what your car is worth instead of what is owed, remove second mortgages and much more. To fully understand these options, schedule your free initial consulation with our office.

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